Financial Planning for High Net Worth Clients

High net worth clients require a distinct and more comprehensive financial plan due to their diverse investment portfolio. A foolproof financial plan that will take care and keep track of all their financial transactions should be in place for them to fully enjoy the perks of being in this elite category of high-net-worth individuals. 

Who are HNWIs and UHNWIs?

A high-net-worth individual (HNWI) is somebody with at least $1 million or more in liquid assets.

On the other hand, an ultra-high-net-worth individual (UHNWI) should at least have $30 million or more net worth of investable assets to his name. Having more than $30 million net worth on paper doesn’t make you a UHNWI if these funds aren’t available to invest.

This distinct group of elite UHNWIs is the richest billionaires in the world. They sit well above those considered high-net-worth individuals. 

To reach these thresholds, the investable assets of these people should be net of liabilities (amount of cash you’d still have if asked to pay off all liabilities). So those who have a huge amount of investable cash and high levels of debt may not qualify as HNWI or UHNWI. 

5 Financial Planning Tips for High-Net-Worth Clients

It’s crucial for high-net-worth clients to do financial planning. For people who have a huge fortune like theirs, life wouldn’t be as comfortable as it should be if they’d have to worry about with whom they’re going to leave everything behind when it’s time for them to go. So, here are five financial planning tips high-net-worth clients should know.

1. Make a customized financial plan

Some high net worth individuals (HNWIs) are content with the fortune they have amassed and opt for investments that yield a passive but steady stream of income. Meanwhile, others strive for more to achieve the ultra-high net worth individuals (UHNWI) status.

These people work hard to provide financial security and wealth for their future generations. Hence, the need for a customized and comprehensive financial plan with a select investment portfolio and strategies to further grow their revenue.

2. Financial risk management and mitigation

Given the amount of investable assets you have, you must be aware of the risks, and how much of that are you willing to take before getting into any financial commitment — whether it be a purchase, an investment, or a business decision.

HNWIs are more prone to litigation, and having to deal with lawsuits can strain relationships, drain finances, time, resources, and energy

You (must) know how unstable markets can be. Not all investments are the same. You win some and you lose some. That said, you need a competent financial advisor to handle your finances, and mitigate the risks.

3. Retirement plan

Having a high net worth doesn’t mean you don’t need a retirement plan. Regardless of how large your retirement corpus (a fund set aside and saved for you to receive a pension after retirement) is, you know that can be depleted due to lack of (or the absence of) sufficient sources of income to support your lifestyle.

Your retirement plan is different from the retirement plan of an average retiree due to the complexity of your tax and financial situation.

And for you to keep the same standard of living at the end of your work life, you should minimize taxes, and create a retirement plan that’s aligned with your needs and preferences.

4. Set up testamentary trusts

A testamentary trust is an irrevocable, discretionary trust you can establish in your will which allows the trustee to oversee and decide who among your nominated beneficiaries (especially if they’re minors or specially-abled) may receive benefits from the said trust at any given time. 

In the event of your passing, a testamentary trust provides for the lawful distribution and bequeathal of all your estate (or parts of it) to your designated and rightful heirs. It includes proceeds from your funds and insurance policies. 

A testamentary trust also ensures inheritance to children from your previous marriage/s or those who aren’t related to you but were otherwise named in the will. It likewise ensures the professional management of your assets.

Setting up a testamentary trust helps reduce your estate tax liabilities and provides income tax benefits to your designated beneficiaries that they otherwise wouldn’t receive had they directly inherited the estate. 

5. Instill the importance of financial responsibility

As a certified HNWI, you are aware of the grit, hard work, and perseverance it takes to have that huge amount of money. This inherent value of hard work and the value of hard-earned money may go missing in the succeeding younger generations. 

So, if you want to protect your wealth and last across multiple generations, instill in your children the importance of financial responsibility and frugal living by setting up a monthly budget for the family when they’re young.

While most parents aren’t comfortable discussing money matters and financial challenges with their children, talking openly to them and getting them involved in budgeting will help them grow up into financially responsible adults.

What Are the Benefits of High Net Worth Financial Planning?

Financial planning for HNWIs offers many benefits and conveniences for the busy lifestyle of the rich. It takes the burden of financial mismanagement off the shoulders of HNWIs. Here are the following.

Eliminate the complexity

Allowing an expert to organize your estate makes your financial affairs more manageable. And because some financial planning decisions are irrevocable, a trusted and efficient financial advisor can help you weigh the options and explain to you the potential outcome(s) of each option.

Protect your assets

Many HNWIs are prone to liabilities due to the nature of their careers. Like doctors or lawyers. If you’re one of those, review your assets and make sure they’re properly titled. This would protect you and your spouse from possible future liability in the event of a lawsuit. You may also opt to protect your wealth from unforeseen liability due to a car accident, for example.

Minimize your tax burden

Part of financial planning for HNWIs involves finding (lawful) ways to reduce your tax bill while you’re still working. By, for example, writing off a settlement of taxes. Or ensuring that your assets are invested in a way where you can maximize tax efficiency.

It’s human nature to be concerned about passing down a huge tax burden to your children (and avoiding it) upon your death. Engage the services of a financial planning firm that will address these concerns on your behalf.  

Maximize your investments

As an HNWI, you have enough dough to fund your retirement without having to race with time. And often, when you need to draw from your portfolio, the value appreciation of your assets far exceeds the amount drawn for your personal financial needs. This paves the way for you to invest in something more aggressively without having to deal with market volatility.

Pass the wealth down

Any HNWI who has a family and kids would want to pass the wealth down to his heirs, with the least implications on taxes. One way of doing that is giving your spouse a $15,000 tax-free cash gift every year.  

If you want to ensure that a family-owned business still runs smoothly after you exit,  you may want to talk with your financial managers about continuity planning. 

You can also opt to incorporate trust planning into your financial plan to give you control over your assets, even retain them if it so necessitates, for you and your heirs as a means of protecting them from their spouses. 


The stakes and the risks are high for the wealthy. Hence, there’s a need for a smart financial plan on their part to keep their resources intact. Whoever said “With great power comes great responsibility” first, was right. High net worth individuals may find that power overwhelming, that even they need financial advisors to efficiently manage their financial affairs.